Amcor shares have gone into a trading halt on the Australian Securities Exchange as it finalises negotiations for an all-scrip buyout of United States packaging group Bemis Company, which is likely to value the US company at about $7 billion.
The company asked for the trading halt “pending an announcement by Amcor in relation to an all stock acquisition that is under consideration by Amcor”.
Amcor said it wanted the trading halt to remain in place “until the earlier of such time as it makes an announcement to the market in relation (to) the proposed all stock acquisition and the commencement of trading on 8th August 2018”.
The Australian Financial Review reported on Monday morning that Amcor was in the final stages of cementing an all-scrip buyout of Bemis Company which would also likely result in a dual listing of Amcor’s shares on the New York Stock Exchange. It was likely to value Bemis at $US5 billion.
Bemis operates 57 packaging plants in 12 countries but most of its operations are in the US. ASX-listed Amcor has a sharemarket capitalisation of close to $18 billion and operates 200 packaging plants in 43 countries.
The acquisition will deliver a major step forward in Amcor’s global ambitions. There is also speculation that Amcor may have to bring forward the announcement of its full-year results by two weeks as part of the buyout announcement because investors will want to see how the company’s financial performance is faring.
Bemis is based in Wisconsin and was first established in 1858. It provides packaging to a range of customers in food, healthcare and consumer goods including foil lids for yoghurt pots, flexible plastic pouches for sauces and soups, and printed plastic wrappers for cheese. About 70 per cent of its sales revenue comes from the US and the company has a workforce of about 16,000 people.
Bemis has been heavily restructuring its own operations in the past 18 months under a cost-cutting program known as Agility under its chief executive Bill Austen, designed to strip out $US65 million in costs by the end of 2019. The company has also been under pressure from an activist investment group Starboard Value, which in March was successful in a campaign for Bemis to put four independent directors on its board.
About 44 per cent of Amcor’s global revenues stem from the Americas region, comprising both North America and South America. About 41 per cent of revenues come from Europe and the Middle East, with the remainder from the Asia-Pacific region, including Australia.
Amcor shares are widely held by offshore investors, with about 20 per cent of the shares owned by Australian institutions. Amcor split off its Australasian packaging and distribution operations into a separate ASX-listed company called Orora in late 2013 to focus on global expansion.
Amcor has 35,000 employees worldwide and in 2014 began reporting its profit figures in US dollars because so much of its operations were based offshore and it wanted to reduce the translation effect of currency fluctuations.